One of the most common times people start thinking about estate planning is when their first child is born. This is a logical time to create a will and set up other estate planning documents. After all, estate planning often focuses on passing assets to the next generation. The birth of a first child can start this process.
There are some specific reasons why estate planning is important at this stage in a person’s life. Some people put it off, while others address it right away. Here are two reasons to think about estate planning while children are still young.
Setting up a guardianship
For one thing, parents need to consider what will happen to their children if they pass away while a child is still a minor. Who’s going to step into a parental role? They can use their estate plan to set up a guardianship in advance. They hope that these provisions will never need to be used, of course, but it can give the whole family peace of mind to know that there is a plan in place so that the child will always be taken care of and provided for.
Determining how to leave assets
Another thing to consider is that minors often cannot inherit property and substantial assets. However, there are still ways to address the distribution of these assets. For instance, a parent could set up a trust. If they pass away, their financial assets are transferred into the trust, which holds them until the child turns 18. So even though the child cannot yet directly inherit it, the estate plan can still put the framework in place.
Are you a new parent who wants to get started on your estate planning? Take the time to look into all of the legal steps that are necessary.